Netflix CEO Reed Hastings: No Armageddon Battle With Cable Giants

NEW YORK — In many ways, Netflix CEO Reed Hastings was the perfect choice to close out this year’s Wired Business Conference.

After all, perhaps no company better represents disruption than the DVD-rental and video streaming phenomenon, which has simultaneously delighted millions of consumers, while spooking the legacy pay-television companies.

Hastings was blunt when he delivered his opinion about the prospects of physical media like DVDs.

“Traditional DVDs have probably peaked and will probably decline at the same rate as CDs did over the last ten years,” Hastings said.

Netflix now faces a delicate path. Although the company is growing rapidly, the much-ballyhooed phenomenon of “cord-cutting” does not appear to have begun in earnest — yet. In other words, predictions that consumers would flee their cable service in favor of Netflix have not yet come true.

That doesn’t mean the company hasn’t given incumbent giants like Comcast and Time Warner Cable the jitters.

“There are fears that if Netflix gets bigger, maybe it moves into the current season [of TV shows], recent movies or sports,” Hastings said.

Netflix is not particularly inclined to “go there” — at least not right now, Hastings said, because such a move could prompt “an Armageddon battle” with the incumbent providers.

“We’re small enough that we don’t want to incite World War II or World War III with the incumbents,” Hastings said.

Hastings said that “sizing the market” is extremely important, because if you move too aggressively in a market full of powerful incumbents, you run the risk of provoking a backlash.

Of course, Netflix’s days as a “small” company may be numbered — Hastings said the company hopes to generate $3 billion in revenue this year.

Last month, Netflix hit a symbolic milestone, pulling even with cable giant Comcast in terms of subscriber numbers. Netflix now boasts nearly 24 million subscribers world-wide, up from 16 million one year ago.